Jason Stipp: I am Jason Stipp for Morningstar, and welcome to the Friday Five.

Regular viewers of Morningstar.com know that Morningstar's Christine Benz is a big fan of keeping it simple, and in that vein, she's joining me this week while Jeremy Glaser is on vacation, offering five investment types you may not need. Thanks for joining me, Christine.

Christine Benz: Jason, great to be here.

Stipp: So, Christine, you're joining me today with investment types that you may not need, and when you say you may not need them, you're talking mostly to those longer-term portfolio planners, and not necessarily the traders, right?

Benz: Right. So people who want to be hands-off, and in my travels when I'm out and about speaking, I talk to an awful lot of people like that who want to build sort of a "set it and forget it" portfolio. They're not traders; they're not speculators. This advice is for them, not for the traders and speculators.

Stipp: Okay, so number one investment type that you may not need is focused on an area of the market that is of great interest to Morningstar readers: dividend-paying stocks. These seem like generally a pretty good idea, but you're saying you may not need to go out and buy a [dividend-focused] fund.

Benz: Well, that's the thing. So yes, you do want dividend-payers in your portfolio. It's certainly valuable to have companies that are going to pay their investors first, and our colleague, Josh Peters, enthuses about them all the time, as do a lot of our users.

What I would say, though, is if you've got a good low-cost diversified fund in your portfolio, the odds are really good that you've got plenty of dividend-payers right there, and you've also got plenty of dividend yield right there.

So, a plain-vanilla low-cost S&P 500 index fund right now has an SEC yield of about 1.75%, whereas the typical fund with "dividend" in its name actually has a lower SEC yield than that. So, costs are the name of the game, really, if you're looking for dividend-paying stocks--either you want to buy them directly or you want to opt for a very low-cost product that will get you some dividend-payers along the way.

Stipp: Christine, the second one has to do with an area of the market that's concerned a lot of investors: fixed income. And it has to do with these unconstrained bond funds. These are bond funds that can go anywhere and try to avoid the trouble spots. We've talked about them a lot in Morningstar videos. Why might an investor not need one of those funds?

Benz: I actually like this category of funds a lot. I always feel like, well if you're opting for an active fund, why not give that manager a wide open toolkit to go as many places as he or she wants.

But I do think that a lot of the funds that are core holdings for fixed-income portfolios, so your PIMCO Total Returns of the world, Harbor Bond, MetWest Total Return, TCW Total Return--these are funds that are pretty go-anywhere themselves. They have quite flexible mandates and certainly if you own a multisector fund, maybe a good one like Loomis Sayles Bond, you're getting some of the same exposure you might get through one of those unconstrained vehicles there as well. So, I think the key is that an unconstrained product might not be necessary if you do have that good, core flexible fixed-income vehicle in your portfolio.

Stipp: If that fund has good management that you're familiar with, then it's certainly better than going with an unconstrained bond fund where you're not familiar with management at all?

Benz: That's the thing. Although some of the funds that we've been recommending, so I know PIMCO's Unconstrained Bond as well as a J.P. Morgan fund that our colleague Eric Jacobson likes a lot, those do have pretty experienced management teams.

But we have seen a lot of me-too activity in this category. In fact, AllianceBernstein had a fund that it even renamed "unconstrained" to try to get in on this action. So, not all these funds are particularly good.

Stipp: So Christine, let's go overseas and take a closer look at emerging markets. These funds have had really good performance over a lot of different trailing time periods. Should I be looking at any dedicated emerging-markets fund? Why or why not?

Benz: I would say for many investors no, and the simple reason is that if you look at the typical core large-cap, foreign large-blend fund, what you're getting there is about 10% of emerging-markets exposure right there; that's the average fund. Some funds have much more.

So, dedicating a slice of the portfolio to emerging markets may be duplicative of something that you already have in your portfolio, and again I would say if you have a good core fund with a manager you really like and respect, why not delegate that decision about whether or whether not to be in emerging markets to that manager, rather than trying to figure it out yourself?

Stipp: Emerging-markets have had good performance, but also a lot more volatility. If you double-down on that bet by getting an individual fund, you might end up with a much riskier portfolio than you anticipated.

Benz: That's absolutely right. So you want it in your portfolio for sure, because I think we all look at long-term growth, and see that it's going to be coming from some of those markets, but you don't necessarily need to seek out a dedicated vehicle.

Stipp: So sticking with the international theme, Christine, currencies are something that investors may be interested in because they don't have a lot of correlation with other asset classes. That's a way to diversify. There are some currency funds available that could look like a good way to get diversification, but is it necessary?

Benz: Probably not, and I would say of all the categories that we have discussed so far, this is the one that I am least positive on and seems the most unnecessary. And the reason is, certainly if you've got a good broad international stock fund that does not hedge--and definitely if you've got a global bond fund or world bond fund of some kind that does not hedge--you are getting plenty of currency exposure right there; no need to layer on additional currency exposure via one of these funds, although there have been increasingly a lot of ETFs and other vehicles cropping up to let people make concentrated plays on one currency or another.

Stipp: Take a look at your international funds, see what their currency policy is, and you can get a sense of if you are already getting that exposure.

Benz: And most funds at this point, Jason, are unhedged so they are not monkeying around with the currency exposure. They will give you full-on currency exposure if that's what you want to have as part of your portfolio.

Stipp: Christine, lastly is an area of the market that I think a lot of investors have thought, maybe it's more of a core diversifying area of real estate. And I think for a long time people have thought, well real estate is a good way to diversify that portfolio. But it depends on what your other holdings are right?

Benz: It does. So one thing we've often heard is, well, real estate is really uncorrelated with stocks. Well not really; yes, it's uncorrelated with large-cap stocks or maybe the S&P 500. But real estate investment trusts have actually been quite correlated with the small-value category.

So my thought is, if you have small- and mid-cap value exposure in you portfolio, check to see: they may own REITs directly in one of those funds, or at the very least know that small- and mid-cap value fund may track performance pretty closely of real estate investment trusts.

So for me I don't think that it's a necessary asset class in every portfolio. You maybe getting plenty of that exposure via small- and mid-cap value exposure.

Stipp: So, Christine a lot of good investing ideas in here, but if you've made a good, hands-off, simple portfolio, you might not have to go and target a lot of these.